Funeral Loans: Compare Options & Learn More

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The loss of a loved one is a challenging time for family and friends. Emotions run high, plus there are so many details to handle. Furthermore, they can be extremely expensive.

There are a variety of loans and other financing options to pay for funeral expenses but you should weigh them carefully before deciding.

LightStream

LightStream, our top-rated lender, is a great option when looking for a funeral loan. LightStream’s Rate Beat program ensures they beat any rate a competitor offers by .10 percentage points. With low rates and no fees, a LightStream personal loan is a good choice for those looking to finance a funeral with fair to good credit.

Credit score category: Good, fair

Soft credit pull to check rates: Not available

Deposit time: As soon as the same day

Origination fee:0%

Late fee: None

Discounts: 0.50% interest rate reduction for enrolling in autopay

Repayment terms: 24 – 144 months

Upgrade

Upgrade is a great option if you are looking for a smaller funeral loan since this financial institution has a smaller minimum loan amount than most other lenders. Checking your rates with Upgrade won’t impact your credit score and eligibility is based more on free cash flow as compared to competitors.

Credit score category: Fair, bad

Soft credit pull to check rates: Yes

Deposit time: As soon as the next day

Origination fee:2.9% – 8%

Late fee:$10

Repayment terms:36 or 60 months

LendingClub

LendingClub is a peer-to-peer lender and is a solid option for those with bad and fair credit that need a funeral loan. The minimum loan amount also makes LendingClub a good option for those who need smaller loans.

Credit score category: Fair, bad

Soft credit pull to check rates: Yes

Deposit time: As soon as 4 business days

Origination fee:1% – 6%

Late fee:$15 or 5% of payment amount

Repayment terms:36 or 60 months

Avant

Avant offers competitive rates, quick funding, and a variety of repayment terms. If you have bad credit, Avant is a good funeral loan lender because of its low minimum credit score requirement. Avant also allows you to check your rates with a soft credit pull that won’t damage your credit.

Credit score category: Fair, bad

Soft credit pull to check rates: Yes

Deposit time: As soon as the next day

Origination fee:4.75%

Late fee:$25

Repayment terms: 24 – 60 months

What to Consider With Funeral Loans

Most funeral loans are actually personal loans, and are therefore widely available from banks, credit unions, and even alternative lenders. Personal loans typically come with fixed rates and predictable repayment schedules, and can be used for just about anything.

Lenders will consider your credit score, income, expenses, and more when deciding if you are eligible and what your interest rate will be. Normally, personal loans do not require collateral.

Funeral Loan Pros

Quick Funding: Online lenders are built for speed. The fastest service is available from online direct lenders, who can quickly approve loans and deposit funds in your checking account.

​Convenience: It’s easy to shop online for the best terms. Furthermore, you can apply online in just a few minutes, and once approved, have access to the funds on the next business day.

​Fixed Monthly Payments: You spread out your repayments over a set number of months, meaning you don’t have to come up with a lump sum. In addition, since rates are usually fixed, your payments won’t change from month to month.

​Build Your Credit: Many online lenders report your loan activity to a national credit bureau. If you pay your loan back on or ahead of time, you might be able to raise your credit score.

Don’t Have to Tap Into Savings: Many folks don’t like to tap savings, especially retirement accounts, to pay for other expenses. They would rather pay interest on a loan than spend their savings. However, if you are in an emergency this might make the most sense.

Funeral Loan Cons

Interest Rates Can be High: APRs for personal loans can be high if you don’t have a decent credit score.

​Access: If you are a sub-prime borrower – with a FICO score below 600 – you might not be able to find a lender that will approve your application. The same is true if you have a scant credit history. If you are sub-prime and are able to secure a loan, you may be asked to put up collateral and/or accept a very high APR.

​Tendency to Overspend: Assuming you have acceptable credit, you might feel drawn to borrow a few thousand extra in order to have a fancier funeral than you would if you paid out of pocket. This creates a larger debt and extra interest expense.

Availability of Alternatives: You might be able to finance a funeral on your credit card. There are a number of alternatives available that don’t involve debt, including:

Prepaid Funeral Financing

​Death benefits from life insurance policies

​Savings accounts

​Totten Trust, which is a bank account payable upon death

​Other trust accounts

​Joint bank account with deceased

​Use of assets from deceased’s estate

Cost sharing among family members

​Fundraisers and crowdfunding

​Asking the deceased’s employer for assistance

​Victim compensation

​Social Security benefits (only $255, but every little bit helps)

Payment assistance (see Funeral Consumers Alliance website)

​Assistance for veterans from the National Cemetery Administration

Assistance from your local county treasurer’s office

Costs of a Funeral

According to Parting.com, the average cost of a traditional funeral in North America runs from $7,000 to $10,000. Here are some approximate figures for the main funeral costs:

Funeral director’s fee: $1,500

​Casket: $2,300 (although less expensive caskets are available)

​Embalming: $500

​Funeral service: $500

​Grave site: $1,000

​Grave preparation: $1,600 (includes digging and lining)

Headstone: $1,500

Often, extra money is spent on additional flowers, a reception, musicians and other items. Direct cremation is a less expensive alternative, running on average between $1,000 and $3,000, more if you use a casket in the cremation. The Federal Trade Commission publishes a handy checklist that you can use if you want to shop funeral homes and compare prices.

Author: Jeff Gitlen

Jeff Gitlen is a graduate of the University of Delaware. He writes about a wide range of financial topics including student loans, credit cards, small business financing, and more. His work has been featured on a number of sites including Bloomberg, CNBC, Forbes, Market Watch, and more.

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